As we blogged Wednesday, this week the Small Business Administration (“SBA”) published a lengthy final rule that implements the long-awaited small business regulation changes mandated by the National Defense Authorization Act (“NDAA”) of 2013. The rule makes a number of very important changes affecting Federal contractors. One of the more important changes makes it easier for small businesses to form joint ventures (JVs) to compete for government procurements and removes prior, and often confusing, restrictions.
A JV will now be considered as a small business for Federal procurement purposes as long as each individual JV partner would qualify alone as a small business under the relevant contract. Essentially, this rule expands the exception to affiliation for all joint ventures where both concerns making up the JV are individually “small.” Of course, each small business must not otherwise be affiliated for different reasons.
Currently, in addition to the exclusion from affiliation given to an 8(a) protégé firm that joint ventures with its SBA-approved mentor for any small business procurement, there is also an exclusion from affiliation between two or more small businesses that seek to perform a small business procurement as a JV where the procurement is bundled or large (i.e., the value of the procurement is greater than half the size standard corresponding to the NAICS code assigned to the contract – for revenue based size standards, or $10 million for employee-based size standards).
The new rule, however, expands and clarifies this exception to affiliation, allowing small businesses to joint venture as long as both are small, regardless of the value of the procurement. Thus, the size of the procurement no longer presents a restriction.
The final rule takes effect on June 30, 2016.
Michael H. Payne is the Chairman of the firm’s Federal Contracting Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues, and dispute resolution.
Robert G. Ruggieri is a Senior Associate in the firm’s Federal Contracting Practice Group. He practices law in the areas of government contracts, procurement, and construction and has significant experience assisting small businesses with teaming and joint venture agreements.